The Dow Jones industrial average lost 55.75 points, or 0.3 percent, to 17,737. The Standard & Poor's 500 index lost 6.65 points, or 0.3 percent, to 2,066.13 and the Nasdaq composite lost 22.75 points, or 0.5 percent, to 4,891.80.

While stocks have recovered most their losses from earlier in the year, investors remain somewhat pessimistic about the market in the near term, especially ahead of the quarterly earnings reporting season, which unofficially beings next week with results from aluminum mining company Alcoa.

Profits of companies in the S&P 500 are expected to drop 8.5 percent from a year ago, according to data from FactSet, with most of that decline coming from the oil and gas sector.

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This is despite the continually positive economic reports out of the U.S., including last week's jobs numbers and manufacturing data.

"While the economic fundamentals are good, investor sentiment is still quite negative," said Samantha Azzarello, a global market strategist at J.P. Morgan Funds.

The low expectations for company earnings mean that stock values remain relatively high. Investors are paying roughly $18.63 for every dollar of earnings in the S&P 500, well above the $14 to $15 they typically pay.

"You're going to need a big improvement in companies' results for stocks to move higher," said Kristina Hooper, head of U.S. investment strategies at Allianz Global Investors.

Stocks were not as impacted by a noticeable drop in oil prices on Monday, continuing a trend that started last week. Benchmark U.S. crude fell $1.09, or 3 percent, $35.70 a barrel on the New York Mercantile Exchange. Brent crude, used to price international oils, lost 98 cents to $37.69 a barrel in London.

Weeks earlier, a sharp drop in oil prices could have reverberated far more greatly on the stock market. Azzarello says the breakdown in oil's influence on stocks could ultimately be a good thing.

"The market just had to work itself out," Azzarello said.

In individual company news, Virgin America jumped $16.20, or 42 percent, to $55.11 after the company agreed to be bought by Alaska Air Group. Shares of Alaska Air fell $3.09, or 4 percent, to $78.92. JetBlue, which had bid for Virgin as well, fell 92 cents, or 4.3 percent, to $20.41.

Tesla Motors rose $9.40, or 4 percent, to $246.99 after the company announced it had received 276,000 preorders for its highly anticipated Model 3, which is to be unveiled on Thursday.

Bond prices rose slightly. The yield on the 10-year Treasury note fell to 1.76 percent from 1.77 percent. The euro was mostly unchanged at $1.1397 while the dollar fell to 111.26 yen from 111.73 yen.

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